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Credit
Scores and Mortgage Rates
Your credit score is typically one of the primary
factors in determining what interest rate you are
offered. When a bank or lender sees that a customer
has a prompt payment history, they are more likely
to offer a superior rate because they know that they
will not have to endure extra costs trying to service
their loan. Investors do not want to have to spend
time and resources trying to collect payments and
certainly do not want to have to deal with the hassles
of foreclosing on a property if necessary. That is
why people who have less than perfect credit often
receive higher rates than people who have paid their
bills on time. Lenders may be willing to take on customers
with damaged credit however they increase the rate
to off-set the associated risk.
Mortgages - Getting Credit Scores
You may want to check your credit scores prior to shopping for a mortgage. You
can obtain a free copy of your credit report from the
three largest credit reporting agencies by visiting
AnnualCreditReport.com. Unfortunately, you will need
to pay in order to receive your actual scores. There
is no clear-cut line that determines where good credit
ends and poor credit begins. Many lenders require a
620 minimum score while other such as American Financial
Resources offer a
low
credit mortgage product which may let the borrower
go down to a 580 score (subject to change). No matter
what your scores are, it is important to keep in mind
that this is only one variable in the decision making
process. If you will have a good amount of equity in
the property and solid assets, a lender may be inclined
to place less emphasis on your credit history.
A qualified mortgage professional should be able
to help you navigate your credit report and let you
know exactly what you are qualified to borrow.
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